Things to consider when selling your farm
With over 20,000 acres of farmland marketed across Great Britain already in 2016 (with more in the pipeline following the outcome of the June referendum) an increasing number of sales are now being agreed. Early consideration of the following are vital to ensure a smooth sale process:-
- Tax - seeking tax advice before you commit to sell is essential. A farm sale is most likely to attract a CGT liability and your professional advisors will work with you to establish any reliefs available. Consider the VAT position and make sure you have evidence of any elections to provide to the buyer.
- Title - locate your title deeds. Determine whether the farm is registered at the Land Registry. If not, consider lodging an application for first registration in advance of a sale. If the farm is registered check that plans accurately reflect the boundaries on the ground and that all rights and reservations are correctly noted on the title. Common issues arising include historic covenants limiting the use of the farm and missing title documents. These issues can be overcome, e.g. with indemnity insurance but will need to be dealt with well in advance.
- Vacant Possession - if the farm is tenanted you need to establish if and when vacant possession can be achieved. This depends on the type of tenancy that has been granted. Notices to quit will need to be served on tenants in accordance with prescribed timescales. When selling with vacant possession have arrangements in place so that you can physically vacate by the completion date. Consider holding a sale prior to completion to dispose of unwanted machinery or stock.
- Replies to Enquiries - you will need to provide a buyer with replies to enquiries in a standardised format together with supporting documentation. Collate leases, consents, environmental licences, utilities information, planning permissions, BPS statements and copies of any agri-environmental schemes. Establish whether any third party consents are required, e.g. bank consents. Dealing with this at the outset can avoid a situation where a third party holds you to ransom.
- Special Conditions - consider whether you require any special conditions in the sale contract, e.g. a right of holdover to harvest any crops following completion of the sale. Does the farm have development potential and do you wish to impose overage on future development? Are you retaining any land and wish to impose restrictions on how the farm can be used going forward? Do you require the buyer to take over any agri-environmental schemes?
Being fully prepared for the sale process will stand you in good stead to achieve a smooth, cost-effective and timely completion.
For further help or advice, please contact Lupton Fawcett’s Senior Solicitor Hannah Farmer.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.